Market watch: OPEC leaves door open for possible quota cuts
As energy prices weakened, officials of the Organization of Petroleum Exporting Countries said Tuesday they would discuss "coordination of the implementation of the organization's decision to reduce output" at a Dec. 28 meeting in Cairo.
By the OGJ Online Staff
HOUSTON, Dec. 18 -- Energy futures prices weakened Monday as traders ignored Norway's pledge to reduce its oil production by 150,000 b/d during the first 6 months of the new year.
However, officials of the Organization of Petroleum Exporting Countries said Tuesday that energy ministers from member countries would discuss "coordination of the implementation of the organization's decision to reduce output" at a Dec. 28 meeting in Cairo.
That seemed to indicate OPEC is considering implementing at least some of its proposed 1.5 million b/d rollback of production quotas, even if non-OPEC producers fall short of the 500,000 b/d production cut demanded by the cartel.
So far, Norway, Russia, Mexico, and Oman have pledged reductions totaling 425,000 b/d, or 85% of what OPEC demanded. The OPEC secretariat Monday acknowledged the "positive statements of support" by those producers.
OPEC officials said production quotas would be decided at the upcoming meeting "in light of pledges made so far by non-OPEC oil producers and after reviewing the current oil market situation."
The January contract for US benchmark sweet, light crudes slipped by 1¢ to $19.22/bbl Monday on the New York Mercantile Exchange, while the February contract gained 3¢ to $19.52/bbl. However, both declined in after-hours electronic trading to $19.15/bbl and $19.46/bbl, respectively.
Home heating oil for January delivery lost 0.44¢ to 53.81¢/gal on the NYMEX. Unleaded gasoline for the same month was down 0.48¢ to 54.55¢/gal. The January natural gas contract also declined by 16¢ to $2.69/Mcf.
In London, the market for North Sea Brent crude declined because of the lack of bullish factors to support a small rise in prices with the expiration Monday of the January contract. The February position closed at $19.06/bbl, down 9¢ for the day after trading in the range of $18.65-$19.38/bbl on the International Petroleum Exchange.
However, the January natural gas contract shot up 21.1¢ to the equivalent of $4.33/Mcf on the IPE.
The average price for OPEC's basket of crudes gained 17¢ to $17.47/bbl Monday.
However, that price averaged $16.84/bbl over all of last week, down from an average $17.93/bbl during the previous week.
So far this year, OPEC's basket price has averaged $23.34/bbl, down from an average $27.60/bbl during all of 2000.